China’s crude imports rebound after June dip

China’s crude oil imports rebounded sharply in July, climbing 22% from June’s decade-low levels to an average of 8.45 million barrels per day, according to customs data. The total for the month reached 35.73 million tons, signaling a reversal after three months of steep declines. The increase follows a period in which China deliberately reduced its intake, leveraging its vast strategic reserves to avoid purchasing at raised prices. The July figures indicate that the country’s temporary withdrawal from the market has ended, with refiners resuming purchases as inventory levels begin to draw down.

The June slump saw imports drop by roughly 4.4 million barrels per day compared to the 2025 average, a move made possible by China’s massive oil reserves. By the end of last year, the country held 1.397 billion barrels in strategic inventories—more than the combined stockpiles of the U.S., Japan, OECD Europe, and five other major oil-holding nations, according to U.S. Energy Information Administration estimates. These reserves, accumulated over years of strategic purchasing, provided Beijing with the flexibility to reduce imports without disrupting domestic fuel supply. The decision to tap into stored crude rather than buy at peak prices demonstrated China’s ability to influence global oil markets by adjusting its procurement timing.

The sheer scale of China’s inventories allowed it to act as a stabilizing force during a period of heightened volatility. While Middle East supply disruptions threatened to push prices higher, China’s reduced demand helped offset potential shortages elsewhere. This dynamic showed the country’s role as a swing consumer, capable of absorbing or releasing supply based on market conditions. However, the strategy was never intended to be permanent. Analysts had long predicted that China’s return to the market would eventually tighten global supplies, particularly as its reserves were gradually depleted. The July rebound suggests that this inflection point has arrived, with refiners now seeking to replenish stocks after months of reduced intake.

Refiners turn to Russian crude amid shipping constraints

The rebound in imports coincides with increased purchases of Russian oil. Sinopec, the world’s largest refiner by capacity, has secured 30-40 shipments of Russia’s ESPO crude for delivery between July and September, totaling 241,000 to 320,000 barrels per day. The deals come as Middle East shipping routes face ongoing disruptions, pushing refiners to seek alternative sources. The reliance on ESPO crude reflects both logistical challenges and economic incentives, as Russian grades often arrive via shorter, more secure routes compared to Middle Eastern supplies.

The shift toward Russian crude isn’t just about availability. Pricing plays a role, too. ESPO blends often trade at a discount to Middle Eastern grades, making them attractive for state-run refiners looking to maximize margins. The cost advantage has become more pronounced as shipping constraints in the Middle East increase freight rates, further eroding the competitiveness of traditional suppliers.

For now, the July surge suggests China’s inventory strategy worked as intended. The country avoided panic buying during the June slump, but as reserves deplete, its return to the market could test global supply balances. The customs data doesn’t break down import sources by country, but industry tracking suggests Russia accounted for a growing share of China’s intake in recent weeks.